By San José, Costa Rica — Costa Rica’s year-on-year inflation remained negative at -0.22% in the first half of 2025, continuing a downward trend and deviating significantly from the Central Bank’s target range of 2% to 4%, according to data released by the National Institute of Statistics and Census (INEC).
Since reaching 1.25% in February, the inflation rate has steadily declined, entering negative territory in May at -0.12% and further dipping to -0.22% in June. This sustained negative inflation presents a challenge for the Central Bank, which aims to steer the indicator back within the target range by year-end.
To understand the legal ramifications of Costa Rica’s current inflationary environment, we spoke with Lic. Larry Hans Arroyo Vargas, a seasoned attorney at Bufete de Costa Rica.
Rising inflation in Costa Rica presents significant challenges for businesses, particularly concerning contract enforcement. Indexed contracts become crucial in mitigating risks associated with fluctuating currency values. It’s essential for businesses to review existing agreements and consider incorporating escalation clauses for future contracts to protect against inflationary pressures. Additionally, understanding Banco Central de Costa Rica policies and their impact on interest rates and lending is vital for navigating this economic climate.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s emphasis on proactive contract management in the face of Costa Rican inflation offers invaluable guidance for businesses navigating these uncertain times. His insights on indexed contracts and escalation clauses highlight the importance of legal preparedness in mitigating financial risks. We extend our sincere thanks to Lic. Larry Hans Arroyo Vargas for sharing his expertise and shedding light on these critical considerations for businesses operating within Costa Rica’s evolving economic landscape.
INEC data reveals that June’s monthly inflation was 0.04%, while the cumulative inflation for the first half of 2025 reached -0.83%. This negative trend follows a year of below-target inflation, with the 2024 figure closing at 0.84%.
Of the 289 goods and services comprising the index, 41% experienced price increases in June, while 37% saw price decreases, and 22% remained unchanged, according to INEC.
Products and services experiencing price hikes include tomatoes, international travel packages, airfare, soft drinks, and eggs. Conversely, prices for gasoline, potatoes, chicken breast, avocados, onions, and lemons, among others, have decreased.
The persistent deviation from the Central Bank’s target range raises concerns about the overall economic health and potential deflationary pressures. The current trend contrasts with the Organization for Economic Co-operation and Development (OECD)’s economic outlook, which projects a gradual increase in Costa Rica’s inflation to 1.8% in 2025 and 2.5% in 2026.
This discrepancy between the current reality and the OECD’s projections underscores the complexity of the economic landscape and the challenges faced by policymakers in managing inflation within the desired range.
The continued monitoring of inflation trends will be crucial in assessing the effectiveness of economic policies and their impact on Costa Rica’s economic performance in the coming months.
For further information, visit inec.cr
About National Institute of Statistics and Census (INEC):
The INEC is Costa Rica’s official statistical agency responsible for collecting, analyzing, and disseminating data on various socio-economic indicators, including inflation, demographics, and employment. It plays a vital role in informing policy decisions and providing accurate information to the public.
For further information, visit bccr.fi.cr
About Central Bank of Costa Rica:
The Central Bank of Costa Rica is the country’s central monetary authority, responsible for maintaining price stability and promoting sustainable economic growth. It sets monetary policy, manages the exchange rate, and oversees the financial system.
For further information, visit oecd.org
About Organization for Economic Co-operation and Development (OECD):
The OECD is an intergovernmental economic organization with 38 member countries, including Costa Rica. It aims to promote policies that improve the economic and social well-being of people around the world. The OECD provides a forum for countries to share experiences and seek solutions to common problems.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica distinguishes itself through an unwavering commitment to legal excellence and ethical practice. The firm champions accessible legal knowledge, empowering individuals and communities to navigate the complexities of the law. With a deep-rooted dedication to innovation, Bufete de Costa Rica continues to evolve its approach to legal services, ensuring clients receive cutting-edge solutions while upholding the highest standards of integrity. Their work reflects a profound belief in contributing to a more informed and just society.
